Derwent worlD Patents InDex 2014 state oF InnoVatIonTWELVE KEY TECHNOLOGY AREAS AND THEIR STATES OF INNOVATION“ First, patents produce higher and more certain investment returns from innovation, effectively ensuring and magnifying the first-mover advantage and helping to justify sustained investments in research and development. Second, patents create a scorecard for measuring innovation. The number of patents often serves as a quantifiable metric in setting corporate objectives and facilitates comparisons with competitors and industry benchmarks.”BRuCE NOLOp Chief Financial Officer, pitney Bowes IncTHOMSON REUTERS 32014 state oF InnoVatIon rePort FeaturIng DwPIiNTROdUcTiONpatents continue to be recognized as a viable proxy for innovation. Rosabeth Moss Kanter, Harvard Business School Ernest L. Arbuckle professor, sums up this sentiment in her statement, “The ability to own a discovery and reap rewards from the investment in that unique invention or concept encourages innovation. Why invest, if predators could easily steal the ideas and make it their own? The patent system is the innovators friend.”Thomson Reuters similarly realizes the importance of accepting patents as such a measure, as evidenced in its annual Top 100 Global innovators program (top100innovators.com) and in this annual State of innovation report.To understand the impact of the patent-innovation connection, it is important to look at how the patent system is changing and the effect of these changes on innovation. The global patent system, the protection engine enabling the commercialization of innovation, has remained relatively constant over the past year with modest developments.in Europe, the launch of the Unitary Patent (UP) and the Unified Patent court were introduced and are certain to have a long-term, positive impact on innovation and patenting across the 25 member countries, representing some 500 million people, participating in this movement. Touted advantages of the UP include cost savings for designating and maintaining patent protection in the 25 participating jurisdictions and expedited decision making regarding validity and infringement claims.in the U.S., noteworthy changes include the official launch of the first-to-file movement (which took effect in September 2013 as part of the America invents Act) and legislation to decrease costly litigation primarily originating from non-practicing entities, NPEs (as part of the innovation Act). The latter movement addresses the concern that suits brought by these NPEs have increased from 29% to 62% of all infringement suits in the two year period from July 2011 July 2013.1 The concern is that the explosion in litigation could have a dampening effect on innovation and divert could-be R2 india is grappling with new generics and pharmaceutical legislation; and South Korea is feeling the effects of increased litigation, with 334 suits filed against South Korean companies in 2013, twice the number of just three years earlier. despite the ever-evolving landscape, the confidence in patents as a benchmark for innovation remains strong. “Patents produce higher and more certain investment returns from innovation, effectively ensuring and magnifying the first-mover advantage and helping to justify sustained investments in research and development,” said Bruce Nolop, chief financial officer, Pitney Bowes inc.41 Wired Magazine, http:/www.wired.com/2013/07/patent-law-broken-abused-to-stifle-innovation/ 2 USPTO.gov, http:/www.uspto.gov/news/speeches/2013/rea_fordham_china.jsp 3 Asia Nikkei, http:/asia.nikkei.com/Business/Trends/South-Korea-hit-by-spike-in-patent-suits 4 Wall St. Journal, http:/online.wsj.com/news/articles/SB100014241278873235829045784872008214219584 THOMSON REUTERS2014 state oF InnoVatIon rePort FeaturIng DwPIThe findings from this years State of innovation report confirm that the post recessionary down- slump has officially rounded the corner and that innovation investment is on the rise. in all categories except Biotechnology, the Thomson Reuters analysts identified increases in activity, with most being in the double digits. For the fifth consecutive year, the computing even oncology-related innovation declined by 2%, despite the increase in diagnoses in this area.Analysts continue to see more activity from emerging markets, specifically from china and Russia. As an example, the University of Peoples Friendship, in Russia, took a spot in the top 10 in Food, Tobacco and Beverage Fermentation, Medical devices and Pharmaceuticals. The future looks promising for global innovation investments and commercialization based on figures in this years analysis.OBSERVATiONS & FiNdiNGSTHOMSON REUTERS 52014 state oF InnoVatIon rePort FeaturIng DwPI2013 Volume2013 Ranking% of Total2012 Volume% Change in Volume (2013 v 2012)Acomputing and Peripherals301,043131%232,5492